banks

Bulge Bank Headcount Index – Q4/2017

Though still tracking at levels last seen in early 2007, Alphacution's index of "bulge bank" headcount - updated through year-end 2017 - continues to walk a tight rope of relative stability as it has continued to do so for most of the past 8 quarters (see exhibit below). This news also seems to track with the prevailing belief and commentary that the US economy is in relatively good shape - if not, at least, stable. As always, a look into the details - and specific banks - yields a more vivid story: For starters, and including Wells Fargo & Company (WFC), 5 of the 10 banks in this analysis are within 5% of their maximum headcount over the past 45 quarters. (Goldman Sachs and RBC are within 1%.) Meanwhile, with the index down approximately 150,000 employees from its high water mark in mid-2011, Citigroup and BAML have shrunk by 166,000 and 81,000, respectively, from their maximums. Rankings of individual bank headcount indices can be found below... WFC, the largest US [...]

By | 2018-02-28T16:29:07+00:00 January 16th, 2018|Alphacution Feed|

Bulge Bank Headcount Index: Rare Uptick in Q2

It's only happened twice since the peak, recorded nearly 6 years ago (at the end of Q3 2011): Alphacution's bulge bank headcount index has recorded a rare uptick, as of the end of Q2 2017 (see Exhibit, below). Now, of course, it may be too soon to sound the trumpets that a major turn has been made for headcount in the global banking sector. The moves - in either direction - are still small. Although, who knows? Maybe the expectation of regulatory rollbacks has got bank hiring managers feeling more exuberant of late. Or, maybe - as we suggested in our prior post - that process automation, particularly among quant shops, actually requires more people is something that applies more broadly in financial services (given the push to implement more AI). One thing is for sure, most of our bulge banking tracking sample (7 of 9) is bigger in terms of headcount than they were more than 10 years ago. Only UBS and Citi are smaller, but that has been [...]

By | 2018-02-28T16:31:34+00:00 August 30th, 2017|Alphacution Feed|

IT Services: A Force Multiplier?

The following is the opening segment from our most recent study - "IT Services and Strategic Impacts for Global Banks: The Force Multiplier" -  published via our partner, Aite Group. Learn more about how to access the full report here. Today, outsourced IT services are firmly embedded in all industries and most large corporations. Alphacution’s message to financial sector clients and other buyers of IT services is both blessing and curse: The global IT services sector continues to be dominated by lowest-cost, predominantly India-based human capital, and the motivation to engage with these services continues to be, as it seems to have been all along, about labor arbitrage, or the savings harvested from the reduction of high-cost, U.S.- or U.K.-based in-house human capital in favor of lowest-cost, leased human capital. Although the expectation to improve performance—via higher-quality output, more efficient output, or some other cocktail of innovation—is rarely made explicit, we believe that the potential for enhanced process efficiencies adds value to the equation. This is the blessing part. The potential [...]

By | 2018-02-28T16:30:28+00:00 June 13th, 2017|Alphacution Feed|

Trojan Horse or Savior? IT Services Continue to Infiltrate Banking Operations

How far can it go? The relationship between large banks, financial services firms, and insurance companies - sometimes simply known by the acronym BFSI - and large IT services and outsourcing firms, like Tata Consultancy Services (TCS), Infosys, or Cognizant Technology Solutions (among several others), has become increasingly and consistently cozy and pervasive over the past decade or so. In the rearview mirror, this development makes total sense. We all now live in a perpetual "more for less" environment. And, if you can't achieve more-for-less, at least approximate the same functionality for less. So, with BFSI caught in a brutal post-GFC vice represented by unprecedented regulatory pervasiveness on one side and a lowest-rate, lowest-volatility market environment on the other, it makes total sense that a ton of legacy infrastructure, legacy software maintenance, and select semi-skilled, labor-intensive processes have gradually been offloaded to lowest-cost purveyors of these types of services. Clearly, this play has been quite popular. Though BFSI is certainly not the only client sector for global IT services - in fact, the diversity across sectors is broad, from logistics to [...]

By | 2018-02-28T16:32:55+00:00 April 20th, 2017|Alphacution Feed|

Welcome Back to 2006: Top #InvestmentBanking Headcount Roundtrip

Well, it would have been the Top 10 investment banks, but @Barclays doesn't publish quarterly headcount for some reason. Maybe they will help us fix that. Anyway, for the Top 9 investment banks, total headcount is down 13% from its peak in Q3 2011. And, with at least 2 of the 9 - @Deutsche Bank and @CreditSuisse - reporting significant headcount reductions for the road ahead as part their year-end 2016 financial releases and 2017 guidance, it's not much of a stretch for us to predict that the Wonkavator is highly likely to travel further back in time than year-end 2006 (see below). I just want to let this picture dangle for a bit without much comment. We will be revisiting and significantly expanding this analysis in the weeks and months ahead as we roll into the development of our 2nd Annual Global Bank Technology Spending study. Stay tuned...

By | 2018-02-28T16:33:43+00:00 March 2nd, 2017|Alphacution Feed|

@DeutscheBank: Predicting the Pace of Shrinkage

If today's announcement by Deutsche Bank CEO, John Cryan, is to be believed, total group headcount is set to be reduced by 9,000 souls. Note that these reductions will come from a year-end 2016 flock of 99,744 (which, by the way, is still within 2.3% of the all-time high of 102,062 set at year-end 2010). We decided to look into our DB model to take a quick read of the expected pace of these reductions. Here's the setup: Over the 40 quarters from Q1-2007 through Q4-2016, 21 of those quarters represented total headcount reductions. Furthermore: The maximum headcount reduction in a down quarter was -2,256 FTEs (full-time equivalents); The average headcount change over the 40 quarters (not counting an acquisition in Q4-2010) was 880 FTEs; and, The average of the 21 quarters with headcount reductions was -668 FTEs Separate from an outright sale of a business segment (which is being contemplated here in the form of its DB Asset Management arm), organic shrinkage is painful and can take more time than originally anticipated. At [...]

By | 2018-02-28T16:33:55+00:00 February 3rd, 2017|Alphacution Feed|

@VirtuFinancial: Let the good #HFT times roll!

It's March 25, 2016 - and I crack open the newly minted 10-K from our friends at Virtu Financial. The equivalent of that new car smell wafts northward from its fresh digital pages. The anticipation is palpable. With years of intense focus and vigorous debate on the mechanics of #HFT - and the jealous wonderment surrounding its stratospheric profitability - it is both rare and puzzling that the public should get a real, data-driven look inside to support or debunk the mythology of this ultra-secretive corner of the global financial landscape. Searching within this fresh set of data, I update our model - and the output creates one of those WTF cognitive dissonance moments. After all, isn't the heyday of HFT over?! Haven't numerous high-speed shops consolidated or folded? As a refresher, the vid below is what we were saying back in July 2013 (while at Tabb Group): Hello from 2013! Struggling is not what's going on here. By the looks of things at Virtu - at least as of the [...]

By | 2018-02-28T16:34:25+00:00 December 15th, 2016|Alphacution Feed|

Technological Implications of Cultural Transformation – Numerix Video Blog Series

In this FOURTH of a five-part video blog series Jim Jockle, CMO of Numerix sits down with Paul Rowady, Director of Research at Alphacution to discuss the recent FinTech Revolution. They discuss how firms are gearing themselves towards a digital culture, and how companies are working to distinguish themselves in this new age. The five videos cover the following: Part 1: Paralysis by Analysis: Preparation & Analyzation for Digital Disruption Part 2: IT Outsourcing and Transformation Part 3: Revolutionizing FinTech: Looking into the World of Data Automation Part 4: Technological Implications of Cultural Transformation Part 5: Digital Noise in the FinTech Space Jim Jockle (Host): So let me go to your research. You know you suggested a little bit, there’s the differentiators in terms of maximizing our opportunity and then there’s a congested middle-of-the-pack. Transitioning, so yes you had the Fords, who arguably have done very well in that or a transitionary period of time but you also saw the Hondas and Toyotas come out of nowhere and things of [...]

By | 2018-02-28T16:34:48+00:00 December 5th, 2016|Alphacution Feed|

Revolutionizing FinTech and the World of Data Automation – Numerix Video Blog Series

In this THIRD of a five-part video blog series Jim Jockle, CMO of Numerix sits down with Paul Rowady, Director of Research at Alphacution to discuss the recent FinTech Revolution. They discuss how firms are gearing themselves towards a digital culture, and how companies are working to distinguish themselves in this new age. The five videos cover the following: Part 1: Paralysis by Analysis: Preparation & Analyzation for Digital Disruption Part 2: IT Outsourcing and Transformation Part 3: Revolutionizing Fintech: Looking into the World of Data Automation Part 4: Technological Implications of Cultural Transformation Part 5: Digital Noise in the FinTech Space Jim Jockle (Host): So, you know, you bring up one of the big pain fear factors though, is giving up the data, right. So, one of the biggest barriers to the cloud and you know we’ve seen this from different companies, you know and I don’t want Google, I don’t want Microsoft to have my data. I don’t want Goldman to have my data. How much, you know [...]

By | 2018-02-28T16:34:55+00:00 December 4th, 2016|Alphacution Feed|

IT Outsourcing and Transformation – Numerix Video Blog Series

In this SECOND of a five-part video blog series Jim Jockle, CMO of Numerix sits down with Paul Rowady, Director of Research at Alphacution to discuss the recent FinTech Revolution. They discuss how firms are gearing themselves towards a digital culture, and how companies are working to distinguish themselves in this new age. The five videos cover the following: Part 1: Paralysis by Analysis: Preparation & Analyzation for Digital Disruption Part 2: IT Outsourcing and Transformation Part 3: Revolutionizing Fintech: Looking into the world of Data Automation Part 4: Technological Implications of Cultural Transformation Part 5: Digital Noise in the Fintech Space Jim Jockle (Host): What is the role of outsourcing? In the sense of at the end of the day traders are paid to trade. Financial advisors are paid to give advice and on the benefit and breadth of their customer base. Banks are meant to control and manage deposits. There’s still a fundamental core business but yet technology and the risk profile of all these institutions is the [...]

By | 2018-02-28T16:35:03+00:00 December 3rd, 2016|Alphacution Feed|